The sacking of CBI director-general Tony Danker on Tuesday was intended to draw a line under weeks of bruising allegations of sexual misconduct, but within hours Britain’s leading business lobby group was facing questions over the decision to appoint an insider to restore its reputation.
Rain Newton-Smith, who served as the CBI’s chief economist until March, was brought back as the new director-general of the employers’ organisation without an open competition for the role.
She will take over as the outcome of another independent investigation by law firm Fox Williams into allegations of misconduct unrelated to those against Danker still hangs over the organisation.
Three other employees have been suspended while that investigation continues, but CBI leaders pledged on Tuesday to hold a “root-and-branch” review of the body’s organisational culture and the system for employees to make complaints. It also promised to hire a new chief people officer to manage workplace conduct and culture.
Despite the assurances, former employees and affiliates of the CBI were quick to question whether it was appropriate to appoint Newton-Smith given the incidents being investigated are alleged to have taken place while she was in a senior position at the lobby group.
A senior figure at an affiliated trade body said the CBI’s response “won’t draw a line” under the issue. “The reappointment of the previous leadership team so swiftly, without due process, when they all said they heard and saw nothing is crass,” they said.
They added that “there are real questions about [the CBI’s] effectiveness and whether it is needed as an organisation and what its role is, which cannot just be put back in the bottle now they’re out”.
Since the allegations became public, both the government and key CBI members have distanced themselves from the organisation, which has suspended all external engagements, including its prestigious annual dinner.
Downing Street said on Tuesday that ministers would continue to stay away from meetings with the organisation pending the findings of the investigation, while business also remained cautious. Senior CBI officials, including president Brian McBride, are holding one-to-one meetings throughout this week to reassure members, according to two people familiar with the matter.
Both Rolls-Royce and the People’s Partnership, which provides pensions to 6mn people across the UK and has £20bn of assets under management, said they would await the completion of investigations before making a decision on whether to retain their membership.
The chief executive of a hospitality group that is part of the CBI said the organisation needed to re-establish its credibility with government. “We’ll take a view then with the fullness of time and see whether they get back in with the Treasury and the government,” they added.
However Neil Carberry, Recruitment & Employment Confederation chief executive, said in a statement that Newton-Smith had “our full confidence and support”.
Andy Wood, chief executive of the Suffolk-based brewer Adnams which last week said it was reviewing its CBI membership, also welcomed Newton-Smith’s appointment, arguing that an external recruitment process would have taken too long.
“She is walking into quite a cauldron of emotion . . . but she’s the right sort of cool head to be able to deal with it,” said Wood, who worked directly with Newton-Smith in her previous role at the lobby group.
A former female CBI staffer who had previously raised a complaint over an inappropriate comment about her appearance by a senior CBI figure, also backed the new director-general.
“The board finally found its guts,” she said “Rain Newton-Smith will have the confidence of the staff and the members who know her to be on the right side of sexual misconduct issues,” she said.
Another former employee, who raised concerns with the organisation’s human resources department over the treatment of junior staff by more senior managers, was less convinced.
“The hiring of Rain is pretty much a continuation of the old order, which is an interesting thing to do. She was sitting on the executive committee the entire time a lot of this stuff was going on,” they said.
Insiders at the CBI insisted Newton Smith was a popular, well respected colleague and they were confident she was up to the task. They also pointed to the independence of the external inquiry.
Newton-Smith did not immediately respond to a request to comment.
Others are hopeful the negative press coverage, including allegations of sexual harassment, cocaine use and rape, will prompt a genuine reset in the organisation’s culture.
One female former employee told the FT how she had quickly withdrawn from the social scene at the CBI after encountering what she described as a “toxic” male colleague, whose “aggressive, intimidating and creepy behaviour” eventually played a role in her decision to leave the organisation.
“This is an opportunity for CBI to fix the structures that are not working and move forward stronger”, she said.
Another former employee said the biggest issue that needed to be addressed by the new director-general was the prevalence of bullying within the organisation.
“The bullying is the bigger story,” they said. “There are a lot of alpha personalities and the culture is incredibly adversarial.” They added that it wasn’t uncommon for people to “stand up and shout at people” in meetings.
The former staffer noted that one reason junior staff may also feel unable to complain about bullying is that the CBI may have a relationship with potential future employers.
“If you are a policy adviser in education, you would look to get a new job in that field for a company that’s almost certainly going to be linked to the CBI.”
Additional reporting: Josephine Cumbo, Philip Georgiadis, Jane Croft, Robert Wright and Bethan Staton